'It's horrible optics': Mark Carney under fire for vacation at Liberal MP's house

Mark Carney did not break conflict of interest rules when he vacationed at Liberal's house: Bank of Canada

The Bank of Canada insists Mark Carney did not break conflict-of-interest rules when he visited the Liberal finance critic’s seaside home in Nova Scotia this summer, but critics are questioning the outgoing governor’s judgment as he moves to London to head the British central bank.

Mr. Carney spent part of his vacation at the house owned by his long-time friend, Liberal MP Scott Brison, in Cheverie, N.S., the bank confirmed Monday.

A spokesman said Mr. Carney did not discuss the invitation with the bank’s general counsel before the trip “because it was a personal visit in the context of a family vacation.” It was only after the bank started fielding questions about the holiday that the general counsel found the governor was in line with conflict of interest guidelines.

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“Neither the Bank of Canada, nor Governor Carney, have an actual or potential commercial or business relationship with Mr. Brison,” spokesman Jeremy Harrison said. “Nor can [the visit] be defined as partisan or political activity.”

The visit came amid an intensive courtship, as prominent current and former Liberal party stalwarts urged the governor, for the better part of a year, to launch a bid for the party leadership. The speculation only ended when the British job was announced last month. Current leader Bob Rae has also had conversations with Mr. Carney about recruiting him to the party, but not necessarily as leader.

He has brought the impartiality of the bank into question and the policy says that that is a violation

A New Democratic Party spokesman said Monday the party considers the Bank of Canada governor to be a non-partisan position and would never undermine that by inviting the governor to stay at an MP’s house.

Duff Conacher, founding director of Democracy Watch and adjunct professor of law at the University of Toronto, said Mr. Carney had crossed a line.

“He has brought the impartiality of the bank into question and the policy says that that is a violation,” Mr. Conacher said.

“Given that Brison is the Liberal finance critic and the timing that we now know — that there was an act of appeal from Liberals to him — I think it crosses the line because it doesn’t avoid the appearance of impropriety.”

Derek Fildebrandt, a director at the Canadian Taxpayers’ Federation, criticized the governor’s trip, saying Mr. Carney not only has a responsibility to stay out of the political fray, but also to avoid any perception of impartiality.

“At the very least, it’s horrible optics and he should have known that,” he said.

He has said many times he did not contemplate [a Liberal leadership bid], he is clearly not running for political office, and he has been clear that he took no action in that regard

“Who the governor spends his personal vacation with is not anybody’s business, but he must’ve been aware that the optics would be less than ideal.”

Jim Flaherty, the Finance Minister, who has had a close working relationship with Mr. Carney since his 2008 appointment, said Monday he would not comment on the controversy.

“And I usually have comments on everything. But I have no comments on any of that.”

Mr. Brison, who met the governor when Mr. Carney was associate deputy finance minister and he was a Cabinet minister, said it is “not unusual” for his family to host personal friends at their cottage. However, “it would be unusual, however, to publicly discuss personal time with friends in our private space.”

The bank’s guidelines say employees should avoid conflicts between private interests and the interests of the bank, and should consider “the potential negative effect that the appearance of an employee’s external activity might have on the bank’s reputation.”

Before Mr. Carney announced plans to leave Canada for the Bank of England, he repeatedly batted down speculation of a Liberal leadership bid, at one point joking, “Why not become a circus clown?”

“He has said many times he did not contemplate [a Liberal leadership bid], he is clearly not running for political office, and he has been clear that he took no action in that regard,” Mr. Harrison reiterated.

But Mike Moffat, an economist at the Ivey School of Susiness at the University of Western Ontario, told The Guardian newspaper it showed ‘‘a complete lack of judgment.’’

“The larger issue here is that Carney is being seen as the guy who can do no wrong,” he said.

There are those who want to find what they make out to be questionable actions and questionable decisions

“For the most part, he’s been a very strong governor. There’s some point where you start to believe that anything you do is justified because you’ve been doing such a great job and that’s where these sort of ethical lapses get in.”

The bank’s conflict of interest policy and associated guidelines are spelled out in a 14-page document.

The opening paragraph states: “The Bank of Canada requires that all employees observe the highest standards of professional ethics.”

Among the potential conflicts covered are those relating to “gifts, hospitality and other benefits.” Employees must never “solicit gifts, hospitality, or other benefits in connection with their Bank duties.”

Several Bay Street economists, who asked not to be quoted, said they saw no evidence Mr. Carney had conducted monetary policy in any way other than impartially.

“There are those who want to find what they make out to be questionable actions and questionable decisions,” said Fred Ketchen, a former Toronto Stock Exchange governor, now a senior vice-president at Toronto’s ScotiaMcLeod.

“But I think Mark Carney is the kind of individual who knows what’s right and what’s wrong.”

“Knowing Mark and knowing Scott a little bit, I think they’re both able to govern themselves accordingly and not create any real conflict,” echoed Tim Powers, a Conservative strategist at Ottawa’s Summa Strategies.

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